Metal stocks recover after plunging last week, surge for third straight session

National Aluminium and Coal India notched gains of over one percent, while Adani Ent and Tata Steel surged one percent each. Hindustan Zinc was the lone scrip trading in the red, down one percent.

Most industrial metals on the London Metal Exchange as well as MCX ended higher as investors took advantage of the low prices after the recent fall. A weaker US currency also made the dollar-priced industrial metals cheaper, making commodities more attractive.

The lowering bets on tapering of the expansionary policy by the US Federal Reserve further supported the base metals complex, a report by Angel Broking said.

Vinod Nair of Geojit Financial Services believes the last week's correction prompted many investors to buy the dips.

"The correction has bought buying opportunity as upside cycle is expected to continue by rising fiscal capex and unlocking of economy. Fall in iron ore prices and rising steel demand also supports improvement in margins and profitability over several quarters," Nair told CNBC-TV18.

Metal stocks took a breather from their downward rally last week when the index plunged over three percent due to concerns looming over slowing Chinese demand and global economic growth.

The US business activity has slowed to an eight-month low in August to 55.4 from earlier 59.9 in the previous month, due to materials shortages, a lack of labour, and resurgence in the COVID-19 cases.